Insurance policies may include features that can produce unexpected costs from COVID-19. But policies may exclude communicable diseases.
- Some policies will cover evacuation costs.
- Crisis management expenses might be reimbursed.
- Carefully review policies for exclusions and benefits.
Professional liability insurance can help mitigate costs and shore up funding gaps for the cost of operating during the current crisis, says Margaret Karnick, senior underwriter with Burns & Wilcox in Chicago.
Professional liability insurance is designed to pay for damages and legal defense, up to the policy limit, should a named insured be found liable for a covered claim. But healthcare facilities should review their professional and general liability policies for a communicable disease exclusion, Karnick says.
Many carriers are adding communicable disease- or COVID-19-specific exclusion endorsements. Sometimes, this exclusion language is baked into their policy form, she says.
An evacuation expense endorsement can help mitigate costs of transportation, lodging, and food associated with evacuating community members, Karnick notes. If a professional liability insurance policy includes an evacuation expense endorsement, it may provide reimbursement for a covered evacuation.
Incurring expenses associated with fleeing a disaster can be considered reasonable and necessary. These expenses could include lodging, transportation, housing, food, and providing general care to patients and residents during an emergency or at an alternative location, she says.
“Healthcare residential facilities should review their professional liability and general liability policies to see if they have evacuation expense coverage,” Karnick says. “The coverage trigger is often subject to a certain percentage of the named insured’s patients and residents needing to be evacuated. Reimbursement is often a sublimit in addition to and outside the standard policy limits of liability.”
Another option is a crisis management expense endorsement, which can assist with the expense of crisis-related communications and developing crisis procedures. Similar to the evacuation expense, crisis management expense reimbursement often is a sublimit in addition to and outside the standard policy limits of liability, Karnick explains.
A crisis often is defined as a public announcement that an incident has occurred on the named insured’s premises or at an event sponsored by the insured. Crisis management emergency response expenses are incurred by the insured for services provided by a firm to respond to such a crisis.
“Evacuation expense and crisis management expense reimbursements could be great assets to healthcare insureds,” Karnick says. “Any potential coverage will depend on the policy language and specific allegations of a claim when submitted. It would be highly beneficial to review your professional liability policy with your broker.”
Best practices in risk mitigation require thorough risk management protocols, Karnick says. These include hiring the right people and completing thorough background checks on all employees, creating formal policies and procedures, and properly training employees. Every healthcare facility should be training its employees on infection prevention, fall prevention, abuse prevention, medication safety, and the Health Insurance Portability and Accountability Act, including device and social media use policies, Karnick advises.
“With the current global COVID-19 pandemic, it has never been more important to make certain that your facility has clear written risk management policies and procedures, and that you are adhering to the CMS [Centers for Medicare & Medicaid Services], CDC [Centers for Disease Control and Prevention], and DPH [department of public health] guidelines and protocols,” she says. “Many carriers are requiring COVID-19 supplements to be completed with their professional liability application submission and asking about the insured’s infection prevention and infection response policies and procedures.”
- Margaret Karnick, Senior Underwriter, Burns & Wilcox, Chicago. Phone: (248) 932-9000.